Institutional Incentives for the Evolution of Committed Cooperation: Ensuring Participation is as Important as Enhancing Compliance

TL;DR

This paper develops a mathematical model to analyze how institutional incentives for participation and compliance in commitments can promote cooperation in social dilemmas, highlighting the effectiveness of rewards over punishments and the role of errors.

Contribution

It introduces a novel theory of participation and compliance in explicit commitments within institutional incentives, demonstrating conditions for evolutionary stability and cooperation enhancement.

Findings

Reward-based incentives outperform punishment in promoting cooperation.

Allocating part of the budget to reward participation increases overall cooperation.

Participation errors unexpectedly support stability and cooperation levels.

Abstract

Both conventional wisdom and empirical evidence suggests that arranging a prior commitment or agreement before an interaction enhances the chance of reaching mutual cooperation. Yet it is not clear what mechanisms can promote the participation in and compliance with such a commitment, especially when the former is costly and deviating from the latter is profitable. Prior work either considers regimented commitments where compensation is assumed enforceable from dishonest committers, or assume implicit commitments from every individual (so they are all in and thus being treated as such). Here we develop a theory of participation and compliance with respect to an explicit prior commitment under institutional incentives where individuals, at first, decide whether or not to join a cooperative agreement to play a one-shot social dilemma game. Using a mathematical model, we determine when participating in a costly commitment and complying with it, is an evolutionary stable strategy (ESS) when playing against all other possible strategies, and results in high levels of cooperation in the population. We show that, given a sufficient budget for providing incentives, reward of commitment compliant behaviours better promotes cooperation than punishment of non-compliant ones. Moreover, by sparing part of this budget for rewarding those who are willing to participate in a commitment, the overall frequency of cooperation can be significantly enhanced, for both reward and punishment. Finally, we find that, surprisingly, the presence of errors in a participation decision favours evolutionary stability of commitment compliant strategies and higher levels of cooperation.